WHAT IT TAKES TO BE AN INTERNATIONAL MASTER FRANCHISEE

Master franchising is a form of franchisor-franchisee relationship in which the franchisee essentially becomes a mini-franchisor, for a specified territory. Master Franchisee owns the rights to develop a franchise system within the territory, which could be a metropolitan area, an entire state, several states, a country or even multiple countries.

How does it work?

For obtaining these rights, Master Franchisee needs to pay the international franchisor a fee and must promise to provide certain services to existing franchisees.

The master franchisee recruits, trains and provides ongoing support to each franchisee he signs in his specific territory. In return, he gets royalty revenues and franchise fees generated from operations within that area.

Acting like a mini franchisor, the master franchisee helps franchisees in his/her territory in site selection, equipment acquisition, training, operations and ensuring quality control. 

“There are 85-90% of the international consumption brands in our country, so almost 800-850 international brands are either under master franchise or master license contract in India. It is the most favourite way for international brands to enter India”, reckons Venus Barak, CEO, FranGlobal.

Big international brands like Domino’s, Pizza Hut, Chili’s and McDonald’s have entered the Indian market via master franchising.

Do you fit the bill?

• Significant capital

International master franchising requires significant capital, be it for obtaining the license or opening up outlets/stores as per the agreement with the franchisor.

Introducing a brand in a new country/region is not easy. There are many responsibilities that the master franchisee must be ready to shoulder.

• Have a business plan

Master franchisees must have a business plan that can be executed well and is scalable.They must possess strong management, organizational and inter personnel skills, since they are required to handle the brand in the entire specified territory by themselves. They should be able to help their franchisees set up their stores and train them to manage their business.

“Having a solid business plan is critical, rather more important than having capital. There are investors ready to put in money in interesting concepts and innovative ideas that can perform and are scalable. So, capital can be arranged but business acumen and skills are of utmost importance,” says Venus Barak, CEO, FranGlobal.

• Experience

Experience in the specific industry is desirable, but not essential (depends from franchisor to franchisor). However, experience in franchising is a must.

• Strong Marketing skills

The individual or organization that becomes the master franchisee must possess strong sales, marketing and operational skills. They should be able to teach their franchisees the art of running the business with maximum cash flow for all parties.

Do you know enough?

But before you decide to jump into such a form of business arrangement, it is important to a close look at yourinterests and capabilities and assess whether the brand you want to master franchise with, aligns with your skills or not.

• Self-Assessment

You must have a clarity of thought as to why you want to become a master franchisee of a particular brand. Be clear on how youenvision to develop and enhance the value of the brand/ the asset that you are bringing to your territory.

“Only investing capital is generally not enough. Besides return on investment, there is return on time and effort. Ask yourself if you are ready for such a commitment”, suggests Venus.

• Research

Learn as much as you can, about the international franchisor and the market that you are catering to. Collect comprehensive information on the franchisor, the products or services on offer and competing products and services before committing your financial resources on a long-term basis.

The brand relies on the master franchisee to put their knowledge of the local market to good use for the business. Try to tap the nerve of the market, understanding the psychology and purchase pattern of the customers.

“To be a successful master franchisee, it is important to maintain the brand’s DNA but add local flavours to be able to capture the market and run a profitable business. This way you’ll be able to help the franchisees further in running the successful business,” says Venus Barak, CEO, FranGlobal. She concludes by saying, “International master franchise is a wealth creating business, not just an income generating business. So, the stakes are high and so are the gains.”